For Fixed Bid projects , the approach in our company is :
- The estimation is done for every user story in story points, and team has to convert those story points into hours.
- Once we find out the hours estimate, then we can arrive at the cost of the project.
- Hence, one approach is to run a sample sprint of one week, selecting a few features from the product backlog.
- If the team completes 50 story points in 250 hours, then each story point costs 250/50 = 5 hours.
- So if we estimate, overall, 1,000 story points, then the estimate of hours will be 5 x 1,000 = 5,000 hours.
- The team has to decide on the DoD (definition of done) before coming to this estimation.
- If we're billing $X for each man-hour, then the cost will be 5,000 x $X.
What do you think about this?
- Apart from this, other cost model is TnM(Resource based cost) which should be generally used but not always accepted by client.
Is there any other cost Model used by your company. Please guide?